"Faced with profound changes in the national security environment" the absolute leadership of the military by the ruling Communist Party must be observed, and the unity between the government and the military and the people and the military must always be "strong as stone", he said.

The central government's military outlays are expected to rise 8.1% to ¥1.11 trillion ($175 billion) this year, the Chinese ministry of finance said Monday in its annual report to the national legislative session in Beijing.

Last year, defense spending was set to increase by just 7 percent, to 1.044 trillion yuan ($164.60 billion) about one-quarter of the proposed USA defense spending for the year.

Diplomats say China's defence numbers probably underestimate true military spending for the People's Liberation Army, the world's largest armed forces, which are in the midst of an impressive modernisation programme overseen by Xi. Though China announced its military spending at about $150.5 billion a year ago, observers say it is considerably higher, considering it is now building two more aircraft carriers in addition to the one already in service as well as addition of new jet fighters, including stealth fighter J-20.

Defense spending is still about a quarter of USA levels, but nevertheless its long-term growth, combined with a more assertive enforcement of China's territorial claims, has rattled some of China's neighbors. The figure shown in the budget report apparently excludes the costs for research and development and for purchasing weapons from other countries.

China's military planners have also taken note of the US shift this year in its threat analysis from terrorism to rivals Russian Federation and China, said Yue Gang, a retired colonel and military analyst. The Pentagon has requested a budget of $686 billion in 2019, up $80 billion from 2017. In 2016, it grew 7.6 percent.

Erickson said China has the world's second largest defense budget after the United States, enabling it to achieve the largest and fastest shipbuilding expansion in modern history, the world's largest navy, coast guard and maritime militia by number of ships, and the world's largest conventional ballistic and cruise missile force.

"Some spending will be hidden in civilian spending", said the diplomat, speaking on condition of anonymity.

China's military build-up has unnerved its neighbours, particularly because of its increasing assertiveness in territorial disputes in the East and South China Seas and over Taiwan, a self-ruled territory Beijing claims as its own.

The Spokesperson for first annual session of 13th NPC, Zhang Yesui said China's defense budget takes up a smaller share of its gross domestic product and national fiscal expenditure compared with other major countries.

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